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Saddam Hussein may be long gone from Iraq, but speculation in his currency persists like a poltergeist.

The Iraqi dinar has been the recent object of desire of foreign currency operators selling mostly on the Internet. The pitch goes something like this: "Buy dinars because the current government will revalue the currency and you will get rich."

As with most other hyperbolic pitches, the promise of wealth is couched in language like "sure to appreciate" and "virtually guaranteed." There's absolutely nothing guaranteed in the foreign currency world, which is absurdly speculative and nearly unpredictable.

"Apparently, there are those who are selling Iraqi paper Dinar in the US. From what I can gather, they convince people that the exchange rate will be `reset' as some point in the future so the value in USD will go up 100 fold," Hancock emailed me. "Their “basis” for this argument is that this is what happened with the Kuwaiti currency after the first gulf war."

I have a client who fell for this at the insistence of her son in law," Hancock continues. "I have had two people call me for advice on how to invest their windfall -- both convinced that they would gain in excess of a $1 million -- money coming to them at a date in the future when the currency reset. All three were people who have little to no financial knowledge. All three had stuffed a local safe deposit box with the paper currency. Best I can tell, the currency is being sold at a 40% premium over its market rate.

What the victims don’t realize is that, in this case, if a reset of the Iraqi currency were a sure thing, the person selling it would be hoarding it, not giving away this special information. The victims don’t realize that this known information has already been reflected in the current price. If the market price did not move, then the market collectively does not believe that the price will be reset.”

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There are some more nasty wrinkles to what's behind the dinar curtain. It's illegal for U.S. dealers to market investments without securities licenses, although currency operators can often get around this by signing a form with the U.S. Treasury Department calling them "money service businesses" and marketing the currency as if it was a collectible. This is far from a rigorous securities brokerage license; it's little more than a piece of paper.